California revenues drop below projections

Cash flow is $379 million less than expected

California's cash flow came in $147 million short of projections for the month of September.

Year-to-date revenues are down by $379 million through the first quarter of the 2012-13 fiscal year.

"We're seeing a slow economic recovery," said H.D. Palmer, a spokesman for the Department of Finance. "This is not the traditional recovery, where it takes 12 to 18 months to come out of a recession. This thing is prolonged.

"It's one of the deepest ones since the Great Depression. And it's going to be several years before we can gain back all the jobs that we lost during the recession."

While personal income tax revenues were up by $109 million, the shortfalls involved sales tax revenues, which were $51 million below forecast for September.

Corporate tax revenues were also down by $54 million, according to Department of Finance figures.

California's $96 billion budget is predicated on voter approval of Proposition 30, which would raise the state's sales tax by a quarter of a percent.

Prop 30 would also raise personal incomes taxes for Californians earning more than a quarter of a million dollars a year.

But if Prop 30 goes down to defeat, it will trigger $6 billion in automatic cuts to education.

California public schools -- from kindergarten through 12th grade, along with community colleges -- would lose $5.4 billion.

The University of California and the California State University system each would suffer $250 million in funding cuts.

The California budget is counting on money the voters have yet to approve -- and may not, according to the latest polls, which show support for Prop 30 dropping below 50 percent.

It's not a good way for the state to do business, said Aaron McCauley, a small business owner visiting the Capitol with his family.

"We shouldn't spend more than we bring in," McCauley said.

He told KCRA 3 families have to budget themselves on realistic revenue projections.

"If income goes down, the business isn't doing as well as we projected, then what we do is cut," McCauley told KCRA 3. "Is it piano, is it sports? But something's got to give."

Tandi Marks of Roseville is also worried about the state's declining revenues.

"It does concern us, and we really try to figure out ways to help out with our school system -- because our schools are hurting because of that," Marks said.

Parents are certainly following Prop 30 closely -- and so are teachers who could face layoffs if it goes down to defeat.

"Those mid-year cuts will hit us hard," said Christine Newell, a fifth-grade teacher visiting the Capitol with her class from Turlock. "But it's the reality of the situation. If the money's not there, the money's not there."

California's cash flow came in $147 million short of projections for the month of September and its down by $379 million through the first quarter of the 2012-13 fiscal year. See how historically the first quarter numbers have fared in California.Source: California Department of Finance